How to Finance a MRCOOL Franchise: HVAC Distribution Hubs
By Chris Cornella
A MRCOOL franchise loan usually finances something different from a typical service franchise: a local HVAC distribution hub that stocks and sells the brand’s mini-splits, central systems, package units, parts and accessories to contractors and homeowners. Because the business revolves around a warehouse and a large inventory of equipment, the financing conversation centers on real estate or a lease, inventory and working capital rather than a storefront build-out.
This article explains how the MRCOOL franchise program is described by the company, what costs you should expect to find in the Franchise Disclosure Document (FDD), how the brand’s SBA Franchise Directory note affects deals that include real estate, and how lenders typically evaluate a new MRCOOL hub.
US Professional Funding is not affiliated with, sponsored by or endorsed by MRCOOL; the name is used only to describe the business. Figures and terms in the franchisor’s disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice. Review the current FDD and franchise agreement with a qualified franchise attorney and accountant before you sign.
MRCOOL Franchise Loan at a Glance
- Brand: an HVAC equipment company founded in 2014 and based in Hickory, Kentucky, with nearly 300 team members according to the company.
- Franchise model: regional MRCOOL locations that sell and distribute the brand’s products, with franchising handled by MRCOOL Franchising, LLC.
- Program age: the company announced its move into franchising in 2023 and named its first franchise location in 2024.
- Current footprint: the company lists franchised locations in Massachusetts, the Gulf Coast and the Los Angeles area.
- Fees and investment: not published on the company’s own pages; they appear in Items 5, 6 and 7 of the current FDD, which MRCOOL says is the only way its franchise is offered.
- SBA Franchise Directory: listed as MRCOOL, with a note about the Lease Rider when real estate secures the loan.
What Is MRCOOL?
MRCOOL is a heating and cooling equipment brand founded in 2014 and headquartered in Hickory, Kentucky. The company is led by its co-owners, recently expanded its headquarters with added office space, production space and a product showroom, and reports nearly 300 team members.
The product line includes DIY ductless mini-splits, contractor-grade ductless and central split systems, gas furnaces, package units, geothermal heat pumps, thermostats, compact units, large-space fans, water heaters and compact refrigeration.
How the franchise works. MRCOOL describes its franchisees as local entrepreneurs who deliver its HVAC products in their markets. The company’s announcements describe franchise locations as warehouse-based hubs that stock central systems, mini-splits, package units and parts such as line sets, thermostats and ducting, serving both installing contractors and do-it-yourself homeowners. The first franchise, opened in Massachusetts in 2024, grew out of an owner who started as a MRCOOL dealer and wholesaler before converting to a franchise.
Why lenders view MRCOOL the way they do. A lender sees a well-established equipment manufacturer but a young franchise program with only a handful of locations. That means less franchise-specific operating history to lean on, so the owner’s own HVAC or distribution background, the market study and the inventory plan carry more weight than they would for a mature franchise system.
MRCOOL Franchise Costs
MRCOOL does not publish its franchise fee, royalty or investment range on its own franchising announcements; it states that offers are made only through its FDD and that several states require registration before an offer can be made to their residents. Request the current FDD early, because every loan package will be built around it.
Initial franchise fee. Item 5 lists the initial franchise fee and any territory or development fees.
Real estate, warehouse and build-out. A distribution hub needs warehouse space with loading access, racking and a counter or showroom area. The company has said it helped a franchisee locate and buy a new warehouse, so some owners may purchase property while others lease.
Equipment and vehicles. Expect forklifts or pallet jacks, racking, delivery vehicles or trailers, computers and point-of-sale systems, and possibly demonstration displays.
Opening inventory and working capital. Inventory is likely the most important cost in this model. A hub that promises one-stop availability of systems and parts needs deep stock before the first sale, and Item 7 should state an estimate for opening inventory and additional funds for an initial period.
Total investment. Review the Item 7 table line by line. Common categories to look for include:
- Initial franchise fee
- Real estate deposits or purchase costs, rent and lease deposits
- Leasehold improvements, racking and signage
- Material-handling equipment and delivery vehicles
- Technology, point-of-sale and inventory systems
- Opening inventory of equipment and parts
- Training travel and grand opening marketing
- Licenses, insurance and professional fees
- Additional funds for the initial period
Ongoing Fees and How They Affect Your Loan
Item 6 of the FDD lists recurring fees such as royalties, marketing or brand fund contributions, technology fees, transfer fees and renewal fees. In a distribution business, also look closely at product purchasing terms, because how you buy inventory from the franchisor, at what pricing and on what payment terms, shapes cash flow as much as any royalty.
When you apply for a MRCOOL franchise loan, lenders build these costs into projected cash flow and then test whether the hub can cover its debt payments with room to spare. If fees are based on revenue, the lender will model them against your sales forecast; if inventory is purchased on short payment terms, the lender will want to see enough working capital to carry stock while contractor accounts are collected.
Franchisor Requirements for New Owners
MRCOOL does not publish net worth, liquidity or experience requirements on its own pages. Based on how the company has described its franchisees, HVAC industry experience, contractor relationships or prior dealer or wholesale experience appear to be valuable, but confirm the actual requirements with the franchise team.
Expect a background and financial review, the required FDD waiting period and warehouse selection; plan so that funding is in place before you commit to a warehouse lease or purchase.
Ways to Own a MRCOOL Franchise
New franchise hub. Opening a new territory is a franchise start-up loan scenario. Lenders lean on your projections, your industry experience and the franchisor’s support because the location has no operating history.
Converting an existing HVAC business. The first MRCOOL franchise grew out of an established dealer and wholesaler. If you already sell or install HVAC equipment, converting may let lenders evaluate your existing financial statements, which can strengthen the application.
Buying an existing franchise. Because the program is young, resales are likely to be rare for now. If one becomes available, it would be financed much like an HVAC business acquisition, based on the location’s historical financials and the franchisor’s approval of the transfer.
Financing Options for a MRCOOL Franchise
SBA 7(a) loans. SBA 7(a) loans can combine the franchise fee, inventory, equipment, working capital and, where applicable, real estate into one loan. The SBA 7(a) program maximum is currently $5 million, though program rules can change.
SBA 504 loans. If you plan to buy a warehouse or a building that needs substantial improvements, SBA 504 financing is designed for owner-occupied real estate and long-lived equipment. It does not cover inventory or working capital, so it is usually paired with other financing.
Conventional term loans. Borrowers with strong collateral and liquidity, or existing HVAC companies converting to the brand, may qualify for conventional business loans that can be structured around existing business cash flow.
Equipment financing. Forklifts, racking, delivery trucks, trailers and computer systems can be financed separately through franchise equipment financing and leasing, preserving cash for inventory.
Working capital and lines of credit. HVAC demand is seasonal, with heavy cooling demand in summer and heating demand in winter, and contractor customers may expect account terms. HVAC working capital or a revolving line of credit can help you stock up ahead of peak seasons and carry receivables.
Seller financing. On the rare resale, a seller may agree to carry part of the price. Seller notes are typically subordinate to the primary loan, and SBA programs may limit how they are structured.
To estimate how different loan sizes and terms translate into monthly payments, try our SBA loan calculator.
SBA Loans for MRCOOL Franchisees
SBA lenders use the SBA Franchise Directory to confirm that a brand’s agreements meet SBA eligibility rules. MRCOOL appears in the directory as MRCOOL, which generally means lenders do not need to perform a separate eligibility review of the franchise agreement.
The directory listing carries a note: when the real estate where the franchise business is located will secure the SBA-guaranteed loan, the Lease Rider may not be executed. In plain English, the franchisor’s Lease Rider is a document meant for leased premises. If you are buying the warehouse and pledging it as collateral for the SBA loan, that rider is not to be signed, so make sure your attorney and lender use the correct documents for an owned property.
SBA application tips. Prepare a business plan tailored to distribution, not installation; show the inventory purchasing plan and turnover assumptions; document your HVAC or wholesale experience; and give your lender the full FDD and franchise agreement early.
How Lenders Evaluate a MRCOOL Deal
Personal credit and financial history. Lenders review personal credit, tax returns and any past business or debt history for every significant owner.
Net worth and liquidity. Expect lenders to verify cash for the equity injection plus reserves. Because inventory is a large share of the investment, lenders want reassurance that you can restock after strong sales periods.
Industry and management experience. HVAC installation, wholesale or distribution experience is especially valuable.
Business plan and projections. Projections should show seasonal sales swings, the mix of contractor and homeowner customers, inventory turnover, gross margin assumptions and receivables timing.
The FDD and franchise agreement. Lenders review Items 5, 6 and 7, territory protections, purchasing obligations, term, renewal and transfer provisions. See our article on how the FDD affects franchise financing.
Site, lease or real estate. Lenders review the lease term relative to the loan term, or the appraisal and environmental review if you are buying the building. Our article on franchise real estate financing explains the trade-offs.
Inventory: The Deep-Dive Issue for a MRCOOL Hub
Inventory is both the hub’s biggest asset and its biggest financing challenge. Lenders know equipment can lose value as models change and refrigerant standards shift; the company’s own product catalog shows a move to newer refrigerant systems while older lines are sold as closeouts. A plan that explains how you will manage model transitions, closeouts and slow-moving stock makes a stronger case.
Multi-Unit Growth and Development Agreements
Because MRCOOL hubs can serve multistate regions, growth may come from opening additional warehouses within a territory rather than signing for many separate franchises. Lenders usually want the first location to show stable performance before financing the next one, and they look at combined debt across all locations.
Real-World Scenarios
A dealer converting to a franchise. An HVAC wholesaler already selling MRCOOL products converts to a franchise and moves into a larger warehouse. Its existing financial statements support a loan for the move, racking and additional inventory.
A first-time owner with contractor experience. A former HVAC technician opens a new hub with a leased warehouse. An SBA 7(a) loan covers the franchise fee, inventory and working capital, while a delivery truck is financed separately.
Buying the warehouse. An owner purchases the building for the hub and uses an SBA 504 loan for the property, paired with a separate loan for inventory. Because the real estate secures SBA financing, the Lease Rider is not used.
Common Mistakes to Avoid
- Underestimating opening inventory and the cash needed to restock before peak seasons.
- Signing a warehouse lease or purchase contract before financing is approved.
- Using the Lease Rider on property you own and pledge to an SBA loan.
- Projecting steady monthly sales instead of seasonal swings.
For more pitfalls, see our list of HVAC business loan mistakes.
Next Steps to Finance Your MRCOOL Franchise
Step 1: Request the FDD. Get the current disclosure document and review Items 5, 6, 7, 10, 17 and 19 with a franchise attorney.
Step 2: Decide whether to lease or buy. This choice determines whether SBA 504 financing and the Lease Rider note come into play.
Step 3: Build an inventory plan. Work with the franchisor on initial stock levels, turnover and seasonal purchasing.
Step 4: Prepare your loan package. Include personal financial statements, tax returns, a resume showing HVAC or distribution experience, and a business plan with projections.
Step 5: Compare financing structures. Weigh SBA 7(a), SBA 504, conventional loans, equipment financing and lines of credit.
Step 6: Close before committing. Line up financing approval before signing the franchise agreement and property documents.
MRCOOL Franchise Loan FAQs
How much does a MRCOOL franchise cost?
MRCOOL does not publish its franchise fee or total investment on its own announcements. The current FDD lists the initial fee in Item 5 and the estimated initial investment in Item 7.
What does a MRCOOL franchisee actually do?
Based on the company’s descriptions, franchisees run local hubs that stock and sell MRCOOL equipment and parts to contractors and homeowners in their region.
Is MRCOOL on the SBA Franchise Directory?
Yes. It is listed as MRCOOL, with a note that the Lease Rider may not be executed when the business’s real estate secures the SBA-guaranteed loan.
Can I use an SBA loan as my MRCOOL franchise loan?
Directory listing means the brand is eligible for SBA-backed financing, but approval still depends on your credit, experience, equity and projections.
Can I buy the warehouse with my MRCOOL franchise loan?
Possibly. SBA 7(a) loans can include owner-occupied real estate, and SBA 504 loans are designed for it. Lenders will require an appraisal and environmental review.
Do I need HVAC experience to own a MRCOOL franchise?
The company has not published formal experience requirements on its own pages, but HVAC or distribution experience will strengthen both the franchise application and a loan request.
Does MRCOOL offer financing?
Check Item 10 of the FDD, which discloses whether the franchisor offers any direct or indirect financing.
How long is the MRCOOL franchise agreement?
The term, renewal and transfer conditions appear in Item 17 of the FDD. Lenders prefer a remaining term that covers the life of the loan.
Final Thoughts
A MRCOOL franchise loan is really a distribution business loan: inventory, warehouse space and seasonal working capital drive the structure. Because the franchise program is young, a strong application depends on your own experience, a realistic inventory and seasonal plan, and a careful read of the FDD.
US Professional Funding helps franchise owners compare SBA, conventional and equipment financing for new and existing locations. Learn more about our franchise financing solutions and our HVAC business financing programs, and talk with a specialist about your MRCOOL plans.
